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    • GSP
    • By GSP 15th Jul 17, 12:43 PM
    • 141Posts
    • 29Thanks
    GSP
    Growing Daughter's Pension
    • #1
    • 15th Jul 17, 12:43 PM
    Growing Daughter's Pension 15th Jul 17 at 12:43 PM
    My daughter is 23 and not long into her working life and paying £140 a month into her workplace pension, which is being matched.
    Call it £300 a month times by 12 that's roughly £3.5k a year going in.

    After ten years that's £35k, £70k after 20 years so just over £100k in thirty years time.
    Doesn't sound a lot does it.

    Looking for advice how to grow the pot. Understand for the young its best to do riskier investments in the early years, and moderate risk as near retirement age.

    Don't know what type of pension she is in, but what is the best thing to do to try and grow that pot.
Page 1
    • Theta101
    • By Theta101 15th Jul 17, 12:58 PM
    • 59 Posts
    • 8 Thanks
    Theta101
    • #2
    • 15th Jul 17, 12:58 PM
    • #2
    • 15th Jul 17, 12:58 PM
    £3600 per year for 30 years with 5% annual return equals £254,739
    • GSP
    • By GSP 15th Jul 17, 12:59 PM
    • 141 Posts
    • 29 Thanks
    GSP
    • #3
    • 15th Jul 17, 12:59 PM
    • #3
    • 15th Jul 17, 12:59 PM
    Where does this 5% growth come from Theta101 thanks
    • gardner1
    • By gardner1 15th Jul 17, 1:04 PM
    • 2,189 Posts
    • 3,267 Thanks
    gardner1
    • #4
    • 15th Jul 17, 1:04 PM
    • #4
    • 15th Jul 17, 1:04 PM
    Where does this 5% growth come from Theta101 thanks
    Originally posted by GSP
    If you don't know how the 5% growth comes into it perhaps it's best to leave well alone
    In 30 years time it may be more than Theta101 quoted as no doubt your daughter may increase contributions
    • Theta101
    • By Theta101 15th Jul 17, 1:09 PM
    • 59 Posts
    • 8 Thanks
    Theta101
    • #5
    • 15th Jul 17, 1:09 PM
    • #5
    • 15th Jul 17, 1:09 PM
    Your daughter's pension fund investments.

    "For most of the past century, anyone investing for a 30-year period has been rewarded with a return in excess of inflation of between 4pc and 8pc a year..."

    £3600 / year for 30 at 4% equals £213,582
    £3600 / year for 30 at 8% equals £444,045

    She's doing ok at her age I'd say.
    • Number75
    • By Number75 15th Jul 17, 1:43 PM
    • 178 Posts
    • 192 Thanks
    Number75
    • #6
    • 15th Jul 17, 1:43 PM
    • #6
    • 15th Jul 17, 1:43 PM
    She's 23 - time to take ownership of it herself! She'll take steps to grow it herself if she understands and is engaged with it.

    How have you planned for your retirement? Share that with her - the good and bad, what's been successful, what mistakes you've made.
    • GSP
    • By GSP 15th Jul 17, 1:46 PM
    • 141 Posts
    • 29 Thanks
    GSP
    • #7
    • 15th Jul 17, 1:46 PM
    • #7
    • 15th Jul 17, 1:46 PM
    Will growth happen if she leaves it where it is? Does every dc pension fund grow?
    I thought it needed investment into areas where it could go, i.e. Equities so it could grow more quickly (obviously over time as there will be falls as well).
    • Clifford_Pope
    • By Clifford_Pope 15th Jul 17, 2:32 PM
    • 3,383 Posts
    • 3,470 Thanks
    Clifford_Pope
    • #8
    • 15th Jul 17, 2:32 PM
    • #8
    • 15th Jul 17, 2:32 PM
    My daughter is 23 .
    Originally posted by GSP

    Still growing? She must be a big girl.
    • bostonerimus
    • By bostonerimus 15th Jul 17, 5:03 PM
    • 1,119 Posts
    • 628 Thanks
    bostonerimus
    • #9
    • 15th Jul 17, 5:03 PM
    • #9
    • 15th Jul 17, 5:03 PM
    The money that your daughter and employer pay onto the pension goes into funds. Those funds can gain or lose value. If your daughter invests sensibly she might expect to get 5% annual return.
    Misanthrope in search of similar for mutual loathing
    • GSP
    • By GSP 15th Jul 17, 5:55 PM
    • 141 Posts
    • 29 Thanks
    GSP
    Bostonerim... My daughter is contributing through her works pension.
    When you say investing sensibly, how would she know if her workplace was investing sensibly as this has been arranged by them. Thanks
    • bigadaj
    • By bigadaj 15th Jul 17, 6:14 PM
    • 10,692 Posts
    • 6,982 Thanks
    bigadaj
    Bostonerim... My daughter is contributing through her works pension.
    When you say investing sensibly, how would she know if her workplace was investing sensibly as this has been arranged by them. Thanks
    Originally posted by GSP
    Most comoany schemes will invest into a default fund which will probably be uk focused and in mixed investments, check with her employer or provider and they will have the details. The actual fund can then be found on the trustnet or Morningstar website if you want to monitor it and the investments, most schemes will also have alternative funds she can invest in which might be higher growth but more risky.

    You or her should have a read through the monevator website to get some background on investing, whether in pensions, isas or unwrapped, there's little difference apart from the tax treatment.
    • Alexland
    • By Alexland 15th Jul 17, 8:54 PM
    • 670 Posts
    • 420 Thanks
    Alexland
    Although 5% compound investment gains sound great it's the return after fees and inflation that counts. This might be as low as 2%. She should check her investments to understand the fees and likely growth (remember we have just had an unusually good period).

    If she wants a comfortable retirement my advice is to increase her contributions by trying to get promoted or doing more hours to grow her salary, increasing her percentage contribution and maybe asking her employer to invest any bonuses into the scheme.

    Check if the scheme uses salary sacrifice as this will also save national insurance.

    It's not easy, it might involve lifestyle sacrifices, but does work.
    • atush
    • By atush 15th Jul 17, 9:48 PM
    • 16,333 Posts
    • 10,081 Thanks
    atush
    The money in her pension is invested in funds. That she chose when she started the pension (or the default fund if she count be bothered.

    Step 1, have her call the pension firm and ask, or get out her latest statement and see. If she doesnt like the fund, then she can usually change it.

    To grow her fund, your daughter should increase her contributions each year when her salary increases.

    Do read the monevator site, esp the articles on compounding returns.
    • GSP
    • By GSP 18th Jul 17, 8:57 AM
    • 141 Posts
    • 29 Thanks
    GSP
    Belated thank you for your replies.
    In the outset, she needs a conversation with those who look after her workplace pension.
    Personally, my working life was a db pension and things were taken care of automatically, so I cannot pass on any experience there.
    What I can drum in though is how important the pension is.
    Probably like many starting out something like a pension was too far away in the future, 30-40 years to think about.
    But for those with dc pensions, the planning starts immediately.
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